Centre set to approve Rs4.1 trillion national development budget for fiscal year 2025-26

The federal government is set to approve a Rs4.1 trillion national development budget for fiscal year 2025-26, despite limited resources that have forced the government to halt small-scale projects and exclude new, federally-funded provincial schemes, The Express Tribune reported.

Minister for Planning Ahsan Iqbal will chair the meeting of the Annual Plan Coordination Committee (APCC) today [Monday] to approve the national development budget, which includes development allocations for the federal government, all provincial governments, and special areas. 

While the federal Public Sector Development Programme (PSDP) has been reduced by Rs400 billion to Rs1 trillion, the four provincial governments are set to increase their combined spending by 28%, with a total of Rs2.8 trillion planned for the year. This marks an increase of Rs609 billion from the previous year’s budget.

The budget will set an economic growth target of 4.2% and an inflation target of 7.5% for the upcoming fiscal year.

According to the news report, the budget reflects political priorities, particularly with a large portion allocated to road infrastructure. 

However, allocations for education, health, and water have seen notable reductions. The water sector, for instance, will face a 45% cut, amounting to Rs119 billion, leaving it with just Rs140 billion despite the ongoing concerns over potential water blockages by India.

Punjab has allocated Rs1.19 trillion for its development projects, a 41% increase, followed by Khyber Pakhtunkhwa with a 63% rise to Rs440 billion. 

Sindh plans to spend Rs887 billion, an increase of Rs60 billion, and Balochistan’s allocation is set to rise by Rs32 billion to Rs280 billion.

Despite these increases, the federal government is expected to borrow Rs270 billion from international sources to fund its share, while the provincial governments will collectively borrow Rs802 billion.

The government’s strategic focus on large-scale infrastructure projects, despite cuts to other sectors, highlights the prioritisation of immediate economic needs, even as concerns over sector-specific reductions persist.